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Lowell lags in collecting payment in lieu of taxes from nonprofits

By Grant Welker, gwelker@lowellsun.com

Updated:
05/24/2016 11:27:37 AM EDT

LOWELL -- The city brings in less money in voluntary tax payments from nonprofits than many much smaller communities, including Danvers, Holden, Ludlow and Millbury, according to a report by the city's chief financial officer.

Lowell's so-called PILOT funds, or payment-in-lieu-of-taxes, came to only $840,811 last fiscal year, according to the report. It ranked 23rd in the state.

In fiscal 2016, the city has brought in about $1.1 million.

The data, which was compiled at the request of City Councilor Rodney Elliott, could spark new discussion of a lack of such voluntary tax agreements with entities including two of Lowell's biggest employers and property owners: UMass Lowell and Lowell General Hospital.

Elliott said Monday he intends to ask the city to further press Lowell's biggest nonprofits.

"It seems like we can at least reach out and try," he said, citing the potential for additional revenue to offset high costs.

The city regularly seeks PILOT funds, according to the report by Chief Financial Officer Conor Baldwin. Baldwin submitted a sample letter, detailing what the nonprofit entity would be paying in taxes if it were required to, and asking it to pay any amount it finds feasible.

"Historically," Baldwin said, "this exercise has been to no avail as very few groups have contributed any payments at all."

UMass Lowell has not made PILOT payments but has touted its economic impact on Lowell.

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Last year, it estimated its economic worth to be $854 million, directly supporting about 2,000 jobs and what it says is an additional 7,000 through indirect spending.

Jeff Cournoyer, a spokesman for the university, cited similar numbers Monday, including more than $400,000 in property taxes derived from properties the university leases and $30 million in salaries for Lowell residents.

"With our own police and public works departments, our reliance on city services is small relative to our size and we provide maintenance and infrastructure support on many city properties adjacent to our campuses," he said. "We also don't draw on the city's largest budget item, K-12 education, and in fact contribute to the city's public schools through various partnerships."

Lowell General Hospital valued its "community benefit" at more than $27 million, including free care, community services and sponsorships. It also employs more than 3,600 people. The hospital pays more than $65 million in wages just to its employees who live in Lowell.

"While we understand the City Council's interest in securing additional revenues for the city, Lowell General Hospital's leadership strongly believes that the value the hospital provides the city in community benefits, services and economic impact far exceeds the city's annual request for PILOT contributions," spokeswoman Angela Strunk said in a statement.

Lowell is the state's fourth-largest city but came in 23rd on a list compiled using state Department of Revenue data.

Boston, which has dozens of colleges, hospitals and other nonprofits, collected nearly $79 million in PILOT funds last year, by far the largest in the state. Cambridge was second with nearly $7 million.

In third was Rochester, a rural town between Plymouth and New Bedford that hosts a 95-acre trash-to-energy power plant. Other much smaller towns also came before Lowell, including Amherst, which hosts the UMass flagship campus.

Lowell has only a few PILOT agreements with property owners, according to Baldwin. The Lowell Housing Authority is exempt from real-estate and personal-property taxes but is required by statute to make PILOT payments.

Enel Green Power, which owns a hydroelectric plant on the Merrimack River, reached an agreement with the city last year on a 20-year tax deal. Enel is paying the city the larger of two amounts -- either $500,000, or 6.5 percent of its gross revenues at the plant -- for the first eight years.

In the following 12 years, Enel will pay either $400,000 or 6.5 percent of revenues, whichever amount is higher.

Baldwin estimated that 25 percent, or $1.7 billion, of property in the city is exempt because of nonprofit laws.

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